Accouting 101
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Quiz Chapter 4
ACG 201
Spring 2011
1. | The revenue recognition principle dictates that revenue should be recognized in the accounting records: | A) | when cash is received. | B) | when it is earned. | C) | at the end of the month. | D) | in the period that income taxes are paid. |
2. | A flower shop makes a large sale for $1,000 on November 30. The customer is sent a statement on December 5 and a check is received on December 10. The flower shop follows GAAP and applies the revenue recognition principle. When is the $1,000 considered to be earned? | A) | December 5 | B) | December 10 | C) | November 30 | D) | December 1 |
3. | The primary difference between prepaid and accrued expenses is that prepaid expenses have: | A) | been incurred and accrued expenses have not. | B) | not been paid and accrued expenses have. | C) | been recorded and accrued expenses have not. | D) | not been recorded and accrued expenses have. |
4. | An architecture firm earned $2,000 for architecture services provided with the fee to be paid in the future. No entry was made at the time the service was provided. If the fee has not been paid by the end of the accounting period and no adjusting entry is made, this would cause: | A) | revenues to be overstated. | B) | net income to be overstated. | C) | liabilities to be understated. | D) | revenues to be understated. |
5. | The Village Laundry Company purchased $6,500 worth of laundry supplies on June 2 and recorded the purchase as an asset. On June 30, an inventory of the laundry supplies indicated only $2,000 on hand. Financial statements are prepared monthly by Village Laundry. The adjusting journal entry that should be made by the company on June 30 is: |
debit Laundry Supplies Expense, $4,500; credit Laundry Supplies, $4,500.
6. | Dorting Company purchased a computer system for $5,400 on January 1, 2010. The company expects
Quiz Chapter 4
ACG 201
Spring 2011
1. | The revenue recognition principle dictates that revenue should be recognized in the accounting records: | A) | when cash is received. | B) | when it is earned. | C) | at the end of the month. | D) | in the period that income taxes are paid. |
2. | A flower shop makes a large sale for $1,000 on November 30. The customer is sent a statement on December 5 and a check is received on December 10. The flower shop follows GAAP and applies the revenue recognition principle. When is the $1,000 considered to be earned? | A) | December 5 | B) | December 10 | C) | November 30 | D) | December 1 |
3. | The primary difference between prepaid and accrued expenses is that prepaid expenses have: | A) | been incurred and accrued expenses have not. | B) | not been paid and accrued expenses have. | C) | been recorded and accrued expenses have not. | D) | not been recorded and accrued expenses have. |
4. | An architecture firm earned $2,000 for architecture services provided with the fee to be paid in the future. No entry was made at the time the service was provided. If the fee has not been paid by the end of the accounting period and no adjusting entry is made, this would cause: | A) | revenues to be overstated. | B) | net income to be overstated. | C) | liabilities to be understated. | D) | revenues to be understated. |
5. | The Village Laundry Company purchased $6,500 worth of laundry supplies on June 2 and recorded the purchase as an asset. On June 30, an inventory of the laundry supplies indicated only $2,000 on hand. Financial statements are prepared monthly by Village Laundry. The adjusting journal entry that should be made by the company on June 30 is: |
debit Laundry Supplies Expense, $4,500; credit Laundry Supplies, $4,500.
6. | Dorting Company purchased a computer system for $5,400 on January 1, 2010. The company expects